Protecting your business client from trading risks

Introduction

Once upon a time, retailers, merchants and service companies knew the law, contracts were straightforward and problems between buyer and seller were relatively few. However, since the early eighties the economic and commercial climate in New Zealand has changed markedly. Deregulation has meant greater emphasis on consumerism and increased competition. Legislation in this area has developed rapidly, reinforcing a free market.

It is essential that business clients know the basic law and are well prepared with effective terms of trade agreements to protect them as far as possible from legal actions by dissatisfied customers or others acting on their behalf. And, if they do run into difficulties, legal advice on the options to minimise the damage needs to be timely, effective and practical.

Lawyers advising in this area can no longer get by on the seat of their pants, nor indeed rely on what they learned at Law School, which may have predated much of the legislation (excepting the Sale of Goods Act 1908). Assigning the office junior a set of terms of trade to draft with the assistance only of some copies used by other traders is very risky. It is essential to customise terms of trade to the client’s business if they are to operate effectively when they need to be relied upon.

The authors’ approach to drafting terms of trade is:

1. Think about the simple legal relationships that will be created or are likely to flow from the transactions. (For example contract, tort, fair trading, etc.)

2. What is the special nature of the contract? (For example, sale of goods or services)

3. What other special characteristics will it have? (For example, is it to the other traders, to consumers, or both, or will it have incorporate financial arrangements which may attract application of the Consumer Guarantees Act, Fair Trading Act or Consumer Credit legislation?)

The seminar and booklet aim to reinforce this approach and arm participants with the basic tools to enable them to recognise the issues, know how to deal with them and know when they need to look at the law more closely. Due to obvious constraints, the booklet is not a comprehensive exposition of all aspects of the law in the area. There is a bibliography at the end of the booklet and a list of Commerce Commission publications in the appendices.

This booklet provides an overview for practitioners who operate in this area of law, chapters on the relevant law, a set of tips which warn of issues where dangers lurk, and a checklist to use when drafting terms of trade.

Of course, the opening and reading of this introduction is deemed acceptance by you that the statutory guarantees contained in the Consumer Guarantees Act do not apply.

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